November 27, 2016

‘India should be less worried about trade with US than others’

After a long hiatus, a Republican has become the
President of the United States. And it is not just any old Republican but
Donald Trump, who is above all, a man who understands business and finance.
What does his becoming US President mean for South Asia as a region and India
in particular?

Since the end of the Cold War, India has largely
preferred working with Republicans or even centrist Democrats, as they have
been more open to trade and immigration and generally hawkish on foreign policy
matters, and consequently more supportive of India’s rise. Republicans in the
U.S. Congress were among the biggest advocates for lifting sanctions against
India after the 1998 nuclear tests, and of course George W. Bush played a major
role in the transformation of bilateral ties. But in his successful
presidential campaign, Trump has thrown out many elements of the traditional
Republican platform on social, economic, and foreign policies. I would, in
addition, question his business acumen. By his own count, Trump has declared
bankruptcy four times, and he still mostly reaps the benefits of a large
inheritance.

So Trump and his administration come into power as
somewhat blank slates on India and our neighbourhood. A few key elements of
Trump’s broader policies are already discernible, especially on trade, where he
has reiterated his promised to withdraw from the Trans-Pacific Partnership.
However, many other issues of importance to India will depend on the team that
Trump surrounds himself with, including on terrorism, immigration,
non-proliferation, and climate change. A more managerial Secretary of State or
a Secretary of Defense with greater experience to India’s west may mean a
bumpier ride for India, at least at the beginning. And of course a career
bureaucracy and large U.S. military will ensure an element of continuity in
U.S. policy, for better or worse. While no one – not even Trump himself – knows
exactly what policies he’ll be able to implement, there is a big opportunity
right now for India to shape a favourable outcome from his election. New Delhi
needs to seize it, and there are signs that it already is doing so.

A lot has been said about his views on immigration. Do
you consider this a matter of crucial importance in Indo-US ties?

Immigration to the United States is a big issue for
India. There are over three million Indian-Americans, and they comprise the
wealthiest and highest-educated ethnic group in the United States. Many
Indian-Americans have maintained close ties with India, and are among the most
important foreign investors. Through ups and downs, Indian-Americans have
provided a natural bridge between the two countries, ensuring that India’s
relations with the United States are on a fundamentally different plane from
India’s relations with other large and powerful countries such as China, Japan,
or those of continental Europe. U.S. efforts at stemming immigration could,
therefore, have a negative effect for bilateral relations, making the United
States a more “normal” country from India’s point of view: just another partner
with which to do business.

It is at present unclear whether a Trump administration
will be willing and able to distinguish between low-skilled and high-skilled
immigration, or between permanent and temporary migrants. Indian industry, in
particular, will be paying a lot of attention to the future of the H-1B visa
regime, which has benefited both countries significantly. Additionally, many
Indians – and I include myself here – have benefited from studying and working
in the U.S. before returning to India. Consider Indian industrialists such as
Ratan Tata or the Ambanis or Anand Mahindra, or political leaders like Piyush
Goyal or Jayant Sinha or Shashi Tharoor, or any number of prominent Indian
academics, intellectuals, and activists.

Should New Delhi be concerned about his position on
trade?

India should be less worried about trade with the U.S.
than others – notably, China, Japan, Southeast Asia, and Europe. That’s because
the Indian economy simply isn’t as dependent on trade with America as most
others. In fact, more often than not, trade issues were proving an irritant in bilateral
relations. The Trans-Pacific Partnership, for example, would have put India at
a short-term disadvantage. Trump’s promise of imminent withdrawal from the TPP
will therefore give India some breathing room and respite. That said, trade in
services could possibly suffer from a more protectionist United States, and the
Modi government may find it slightly harder to fulfil its promise of boosting
Indian exports.

Will Trump’s election mean a recalibration of Sino-US
relations, and as a result, some instability in Asia?

There will certainly be changes in Sino-U.S. relations,
but there are wildly different indications about the nature of that change.
Some of Trump’s advisors have articulated an Asia policy that involves a major
U.S. naval build-up in Asia coupled with more barriers on trade. Militarily and
politically, this might mean a closer relationship with India, Japan, and
others who share concerns about China’s rise and military modernization. It may
also lead to a rethink in Beijing about its own military ambitions.
Alternatively, an unwillingness or inability to see through a military build-up
by the United States or a dilution of U.S. alliance structures in the
Asia-Pacific could lead to greater Chinese adventurism, which India would
clearly not welcome.

There are equally contradictory signals on the economic
side. If a decision to stop facilitating China’s economic rise is coupled with
a shift towards deeper economic and commercial cooperation with India, it would
obviously be a great benefit. The argument in favour of such an approach would
be that India’s economy is not state run, even if it is overregulated, unlike
China’s where business is still dominated by state-owned enterprises. At the
same time, India should be concerned about a potential trade or currency war
between the U.S. and China leading to a race to the bottom. A still
fragile Indian economy could be collateral damage.

What does his election tell us about American society?

While Trump’s presidency may in fact prove beneficial for
India in certain ways, I’m not sure it reflects particularly well on the United
States as a country or as a society. Most of the 62 million Americans who voted
for Trump may not share the views that he has articulated or tolerated
regarding minority groups and women. But equally, those who voted for Trump
evidently felt that his condemnable and divisive rhetoric did not disqualify
him from the presidency. Trump has already tried to distance himself from some
of his white supremacist supporters, but there is no question that some will
now feel empowered.

The United States has long distinguished itself as a
country open to immigrants from many countries. Today, more than 13 percent of
Americans were born abroad. The United States has also been quite successful in
dealing with issues of multiculturalism, particularly relative to the nation
states of Europe, including the UK, France, and Germany. Trump’s election is,
in that sense, a setback for the United States, and will undoubtedly affect
America’s international appeal or soft power. Of course, this could all be a
temporary blip, much as Barack Obama’s election seems in hindsight. The United
States has exhibited an ability to self-correct under much more adverse
circumstances in the past. Nonetheless, we should expect a period of much more
open fissures in American society, between rural and urban America, Republicans
and Democrats, men and women, rich and poor, and whites and non-whites.